Dollar and Yen Soared as Worry on Sovereign Risk Intensified Markets were pretty steady last week until concern of Greece deficit contagion across Europe intensified on Thursday and rocked financial markets around the world. Credit-default swaps on the debt of Greece, Spain and Portugal rose to record highs today amid concern that European governments will struggle to fund their deficits. There were even talks in the market that Greece's problem is a 'dressed rehearsal' for US and UK, which also have huge budget deficits. MSCI World index dropped 2.2% to 1095.4 while DOW breached 10,000 level twice before closing at 10,012.23. Dollar managed to ride on risk aversion with dollar index closed above 80 level and the Japanese was also broadly higher across the board. Nevertheless, DOW's refusal to give away 10,000 level and late Friday's pullback in risk aversion argues that flight-to-safety fund flow has possibly peaked in near term and we might see the markets stabilize a bit in near term. Full Report Here... |
ECB: Continue to Wait and See As expected, the ECB kept its main refinancing rate unchanged at 1%. The introductory statement was very similar to the one released 3 weeks ago. The central bank believed current rates remain appropriate and risks to economic outlook are broadly balanced. Same as previous months, upside risks to economy include more-than-expected improvement in confidence, stronger-than-expected recovery in world economy and foreign trades as well as strong-than-expected impacts of macroeconomic stimulus. On the downside, concerns remain relating to a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of a disorderly correction of global imbalances. Moreover, the ECB anticipates bank lending will deteriorate further. Full Report Here... RBA Warrants Doing Less as China is Doing More There are several reasons triggering the RBA to pause monetary tightening, in spite of strong domestic data and the 2-month break since the last meeting. Chinese authorities are now seeking to reduce the degree of stimulus to their economy and this may affect economic development in Australia. At previous meetings, the RBA stated 'growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets'. As Australia and China are close trading partners, tightening in China may increase concerns over a temporary slowdown in Australia's growth. Full Report Here... 2010 Currency Outlook: CHF The SNB was one of the most aggressive central banks in implementing loose monetary policies to fight against the recent recession. Between October 2008 and March 2009, the SNB has reduced the 3-month LIBOR target rate by 250 bps to 0.25%. In March, the central bank also announced a series of liquidity provision programs including additional repo operations and purchases of Swiss franc bonds issued by private sector borrowers. The central bank also declared to purchase foreign currency on the foreign exchange market so as to prevent any further appreciation of the Swiss franc against the euro. Full Report Here... |
EUR/JPY Weekly Outlook EUR/JPY fell sharply to as low as 120.69 last week and the strong break of 124.35 support further affirm our view that medium term rebound from 112.10 has already completed at 139.21. Initial bias remains on the downside this week and sustained trading below 61.8% projection of 134.36 to 124.73 from 126.96 at 121.00 will set the stage for 100% projection at 117.33 next. On the upside, above 123.28 minor resistance will turn intraday bias neutral and bring consolidations. But upside should be limited below 129.96 resistance and bring fall resumption. Read more... All Technical Outlook Reports | Weekly Top Movers | Top 5 | Current | Last | Change
(Pips) | Change
(%) | | GBPJPY | 139.56 | 144.22 | -466 | -3.34% | | AUDJPY | 77.47 | 79.75 | -228 | -2.94% | | NZDJPY | 61.46 | 63.24 | -178 | -2.90% | | EURJPY | 122.03 | 125.13 | -310 | -2.54% | | CHFJPY | 83.17 | 85.08 | -191 | -2.30% | Currency Heat Map Weekly View | USD | EUR | JPY | GBP | CHF | CAD | AUD | | USD | | | | | | | | | EUR | | | | | | | | | JPY | | | | | | | | | GBP | | | | | | | | |
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